In 1933, the American economy was mired in the great depths of the Great Depression characterized by unprecedented unemployment and deflation of prices for business and farmers. President Franklin D. Roosevelt and his advisors believed that the problems of the economy were rooted in excessive business competition resulting in low prices, faltering incomes, and underconsumption. In 1933, Congress passed the National Industrial Recovery Act (NIRA) to stimulate business recovery and economic growth as part of the New Deal. The legislation established National Recovery Administration (NRA) as an executive agency to work with business to craft a variety of industrial codes and regulations for entire industries to decrease competition by setting codes within industries. The goal was to set production quotas to increase prices and introduce labor regulations including a minimum wage to benefit workers. The Roosevelt administration sought to prevent “unfair competition,” ironically by allowing business to cooperate in a way that broke antitrust laws.

The Commerce Clause of the Constitution allows Congress to “regulate commerce…among the several States.” President Roosevelt believed in a Living Constitution that could be interpreted and molded to meet the great crisis of modern industrial capitalism. He believed that solving the national economic crisis was more important than strictly following the Constitution and justified nearly any federal actions on behalf of the American people. The ultimate vision was to achieve a more efficient and planned economy managed by progressive experts in administrative agencies rather than left to the private market.

In Brooklyn, New York, Joseph, Martin, Alex, and Aaron Schechter were four brothers who operated two poultry shops. They were observant Jews whose shops were kosher and adhered to the Jewish laws of kashrut. In 1934, the Schechter brothers were jailed for offering safe, reliable merchandise to their customers.

The government was punishing the Schechter brothers for violating NRA competitive codes, which were minute and specific. The “Code of Fair Competition for the Live Poultry Industry of the Metropolitan Area in and About the City of New York.” This code strictly regulated their butcher shops and required them to violate some laws of kashrut that, as a kosher establishment, they were morally bound to uphold.

The laws of kashrut were concerned with more than just dietary standards. They ensured that animals were treated humanely and that no animal would pose a health risk to consumers. The Schechter brothers, allowed customers to inspect the birds themselves and reject any they deemed unfit. One of the NRA codes, however, specified that no consumer could check poultry for tuberculosis or select individual birds. The Schechter brothers’ own internal inspection process—which was one reason many in the community trusted the shop and bought chickens from them—was now illegal. They lost a number of their devout Jewish customers, and the business suffered from the federal regulations.

The National Recovery Administration inspected the poultry shops numerous times in 1934, and took them to court for violating the NRA codes multiple times. Ironically, one of the charges was that the shops sold “unfit” poultry. They were accused of allowing customers to select chickens, refusing inspections by regulators, selling chickens to unlicensed purchasers, keeping prices “too low,” and even “competing too hard.” The Schechter brothers were found guilty and sentenced to serve a short prison sentence.

When the case was argued before the Supreme Court, the justices engaged in several questions that elicited much laughter from the spectators. When Justice James Clark McReynolds asked about the NRA codes and whether the customer would have to “take the first chicken that comes to hand,” the audience howled. Then, McReynolds inquired to great laughter: “Well suppose however that all the chickens have gone over to one end of the coop.” Perhaps the humorous reaction demonstrated how much NRA regulations impeded the daily operations of thousands of businesses and seemed excessive almost to the point of ridiculous.

In Schechter Poultry Corporation v. U.S. (1935), the Supreme Court unanimously ruled that the regulations of the NIRA were unconstitutional. The Court reasoned that the NRA rules, regulations, and codes had unconstitutionally exceeded congressional authority to regulate interstate trade under the Commerce clause by regulating business transactions within a state. Moreover, the Court held that Congress had unconstitutionally delegated its legislative authority to the executive branch. Chief Justice Charles Evans Hughes wrote the opinion and argued that “extraordinary conditions do not create or enlarge constitutional power.”

Later that day, Justice Louis Brandeis met with two of Roosevelt’s advisers and told them: “This is the end of this business of centralization, and I want you to go back and tell the president that we’re not going to let this government centralize everything. It’s come to an end.”

FDR held a press conference at Hyde Park a few days later and mocked the Court’s interpretation of the Constitution in the Schechter decision. He said that the Court was going back to a “horse and buggy” understanding of the Constitution and interfering with his ability as president to relieve the suffering caused by the Great Depression.

The Supreme Court invalidated several other important pieces of New Deal legislation with constitutional arguments that rested on the same grounds as Schechter. For example, the Court declared the Agricultural Adjustment Act unconstitutional because it regulated local agriculture within the states rather than interstate commerce.

The Supreme Court took the constitutional principles of separation of powers, enumerated powers, limited government, and federalism seriously in the Schechter decision. For several decades leading up to 1937, when the Court reversed itself and took a much more expansive view of the Commerce Clause, the Supreme Court had curbed federal attempts to regulate business within the constitutional confines of the Commerce Clause.

Thank you for the essay. I knew that many of Roosevelt’s new deal legislation was judged to be unconstitutional, but have not actually read about any of the cases until now.

The pragmatism Roosevelt espoused may be alluring for a season, but the Constitution designed to protect and serve all Americans in all seasons.

We saw a similar argument proffered after 9/11. “In order to fight the war on terrorism we need new to view privacy in light of these new threats. The government needs new powers to fight this war.” Unfortunately the recent courts seem to agree with a living constitution. I am not even sure what they believe is private anymore. Anything?